Bond Market Rally, Rates Improving Again
Good morning.
As we close out the week mortgage bonds are catching a bid this morning and mortgage lender's are beginning to reprice an improvement this morning.
We should see slightly better rates than yesterday afternoon. They won't be as low as on Wednesday morning. However, it is a good sign to see this reversal so soon as it sets the stage and some technical strength in place for further improvement.
Where and when will mortgage rates hit bottom?
Ah, the burning question! Yes, you will hear about future Fed rate cuts to their Overnight Rate. Keep in mind that mortgage rates do not follow in lock-step with the Fed's actions. From my analysis I see that mortgage rates will likely hit bottom in late February or early March. That window of time will be another oppportunity to lock in rates near the 40 year lows we saw back in 2003.
Do not delay taking action to the summer on the mistaken belief that rates will bottom then. Technical indicators and past history indicate the bottom is coming in about 4-5 weeks.
I'll be posting this weekend a more detailed explanation of how mortgage rates can improve so quickly, like they did on Wednesday, and then snap right back. Many people asked this question the past few days so let's do a refresher course on the economics behind how mortgage rates are priced to the consumer.
Check for that over the weekend.
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